Title

The Impact Of Fdicia On Bank Returns And Risk: Evidence From The Capital Markets

Keywords

Bank regulation; Bank risk; G21; G28; Wealth effects

Abstract

This study examines the impact of the Federal Deposit Insurance Corporation Improvement Act (FDICIA) of 1991 on bank stock returns and risk. We find that FDICIA had a generally positive effect on bank stock returns and resulted in a significant reduction in bank risk. The extent of the risk reduction varies based on the capitalization, size, and credit risk of the institutions with poorly capitalized, large, and high credit risk banks experiencing the greatest risk reduction. The results obtained using two separate control groups also bolster the conclusion that FDICIA's passage resulted in a significant decline in bank risk. © 2001 Elsevier Science B.V.

Publication Date

2-1-2001

Publication Title

Journal of Banking and Finance

Volume

25

Issue

2

Number of Pages

393-417

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.1016/S0378-4266(99)00131-4

Socpus ID

0041405790 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/0041405790

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